Mobile Payments Will Be Apple’s Next Battle for Control

Three of the top U.S. carriers announced yesterday a plan to work together to enter the mobile payments realm, where they’ll go toe-to-toe with tech giants like Google and Apple. Sparks are bound to fly, but what does Apple bring to the fight?

As Ryan Kim notes at GigaOM, “AT&T, Verizon Wireless and T-Mobile USA said they are banding together to create a new mobile commerce network, called Isis, that utilizes near field communications.” The new Isis system being worked on by the U.S. carrier conglomerate will allow device owners to use their handsets as credit cards. It will launch with Discover and Barclaycard as credit partners. Discover is far behind Visa and MasterCard in terms of U.S. consumer use, and Barclaycard really doesn’t have much of an American presence.

So are network providers are actually ahead of the curve here? Plans for Isis could bear fruit just in time to run up against similar efforts being made by Apple and Google to bring near field communications (NFC) to their mobile devices, the first step in making smartphones true electronic wallets. NFC will allow the iPhone and other handsets to communicate directly with each other and with other NFC equipped devices when in proximity to one another, without the need for a shared network connection. Apple will be able to guarantee NFC inclusion in its hardware for all customers, while Google and the carriers will have to depend on OEMs including the tech in their handsets.

The actual relationship with the customer is an important aspect as well. With Apple, a mobile payment system tied to your iTunes Store account is going to be a hard deal to match, in terms of ease of use, simplicity, and cost, since the infrastructure is already largely in place. Users are also accustomed to using Apple’s system to buy things (with well over 125 million active credit cards tied to accounts at this point), and they can tie it to a payment method of their choice.

Also, there’s the question of platform access. Apple will likely allow a mobile payment app from AT&T (or any other provider, should it end its exclusivity) on the iPhone. But the next iteration of the iPhone could very well have its own payment hardware and software baked right into the OS, and it will be carrier agnostic and won’t require any additional downloads.

On the carrier side, Isis also isn’t set to be widely available to the public for another 18 months, while Apple could introduce mobile payments as soon as June 2011 when it releases its next iPhone revision. Although carriers have people’s credit card info, and an existing billing relationship with customers, Apple does too. Apple’s system will involve far fewer steps and could be available earlier, and that gives it the advantage. Given the choice between Apple-backed iTunes, which is already widely used, and Isis, which is brand new, even with the backing of established telcos, many will probably choose the most familiar route.